Is Steven Joyce the real deputy PM?

Three important things happened last week. Two of them reveal a story about what our rulers and would be leaders think is important. The third got little attention.

First John Key announced the formation of a super Ministry combining the Ministry of Economic Development, Building and Housing, Labour, and Science and Innovation.

The media's focus was on job losses. The forgotten aspect was what this says about who is wielding power in the Beehive.

Getting a new super ministry and getting to be in charge of it marks the ascendancy of Steven Joyce over Bill English.

Forget the formal pecking order. Joyce gets all the positive stuff: employment, (assuming job numbers improve), all the business success stories, science, innovation, and all the good things that can happen around a commercially centred set of ministries.

Bill English gets the less positive stuff: debt, (likely to remain high), borrowing (set to continue), taxes (still with us and not likely to go down anytime soon), spending cuts (inevitable and always painful).

This makes Joyce effectively the real deputy PM and the logical choice to succeed John Key, whenever he chooses to step down.

Secondly David Shearer made a good speech about Labour's new direction. Not blemish free in his performance , but certainly flagging that he has a focus on growth (a rising tide lifts all boats), is less concern about redistribution (capital gains tax stays, tax free income and GST off fruit and vegetables are likely to go).

He gave the impression to his Wellington business audience (I was there) that he was talking about the right issues - growth, prosperity, improving education (including getting rid of poor teachers - blasphemy to many in his party).

Sure he's got a way to go, and it's not at all certain that he can take his party let alone the country with him, but he is certainly signalling that he is different from his predecessors: pragmatic not ideological, of the future, and not chained to the past.

Thirdly the latest productivity figures which came out on Friday show our economic performance is going backwards not forwards.

"Labour productivity, or output per hour worked, fell 0.1 per cent, after rising 3.5 per cent the previous year. Over the five years of the current growth cycle it has averaged 0.5 per cent a year" (the New Zealand Herald reported.)

"Productivity languished in the year to March 2011, with labour productivity slipping, the capital-to-labour ratio declining and multi-factor productivity unchanged.

"Over the five years of the current growth cycle it has averaged 0.5 per cent a year.

"That compares with an average of 1.9 per cent a year over the past 33 years, mainly concentrated in the period from the mid-1980s to the late 1990s.

Those were the years of substantial reform, painful for many, but the health of the economy improved. Now we are slipping backwards again.

It will take all the talents of everyone in politics, regardless of party, to pull us out of this mess.